SEC Cracking Down on LightSquared's Falcone?

Billionaire Phil Falcone, whose cozy relationship with the Obama Administration was first exposed by NLPC, may face civil fraud charges by the Securities and Exchange Commission (SEC). According to a filing yesterday by Harbinger Group Inc., Falcone and two other directors have received "Wells Notices," meaning that they are under investigation.

Falcone is the Chairman, CEO and primary investor in Harbinger Group Inc., a hedge fund. Reportedly, other Harbinger investors include Soros Fund Management. Harbinger owns LightSquared, which has received an unusual waiver from the Federal Communications Commission (FCC) to deploy a national 4G wireless network.

Media reports have alleged that Falcone prevented some investors from withdrawing their money from the hedge fund during the financial crisis, while allowing others to do so. The Wall Street Journal reports today that one favored investor was (surprise!) Goldman Sachs. One of the Harbinger directors who received a Wells Notice is Omar Asali, who co-headed Goldman's hedge fund investments before joining Harbinger in 2009.

It has also been alleged that Falcone personally borrowed more than $100 million from the hedge fund to pay a personal tax obligation.

The FCC waiver came after it approved Harbinger's acquisition of a company called SkyTerra, which Harbinger renamed LightSquared. In 2005, then-Senator Barack Obama invested $90,000 in the obscure, thinly traded SkyTerra. Obama was put into the investment by a UBS broker at the behest of a major donor to Obama's campaigns named George W. Haywood, who was also a major SkyTerra investor.